Your credit score is determined by many factors in your credit report. Credit score changes usually don’t happen without reason; it is possible that you may have missed some recent changes that may have occurred in your finances. Here are a few possible reasons:
You closed a credit card: If you happened to recently close one of your credit card accounts, your credit score may decrease because your credit utilization increases. Credit utilization accounts for 30% of your FICO® score. The older your accounts, the higher your score, so closing an older account reduces the average age of your credit accounts.
You paid off a long-standing loan: If you recently paid off a car or mortgage loan that has been on your credit report for a while, it would have built a long positive credit history. Paying it off will cause a slight drop in your score.
You opened a new credit account or applied for a new loan: This also drops your credit score in two ways: a) by reducing the average age of your credit accounts; and b) it gives a hard inquiry on your credit history. The shorter your credit history, the lower your score can be, so new accounts will cause your score to drop in general. A new credit card also means a hard inquiry into your credit report that will temporarily cause your score to drop.
Errors in your credit report: Reviewing your credit reports regularly is recommended because there may be some errors that may be putting a dent in your credit score. Fixing these errors may take some time, but disputing them can help significantly.
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